Israeli Prime Minister Benjamin Netanyahu, center, arrives at his office at the Knesset, Israel's parliament, in Jerusalem Monday. In a speech Sunday, Mr. Netanyahu backed down on decades of opposition to Palestinian statehood and invited the Palestinians and the rest of the Arab world to resume talks.

Tel Aviv — Prime Minister Benjamin Netanyahu broke new ground with his speech Sunday. He voiced support for the first time for a Palestinian state. But he also attached a condition that no other Israeli leader has put on peace negotiations: Palestinians must recognize Israel as a Jewish state.

"A fundamental prerequisite for ending the conflict is a public, binding, and unequivocal Palestinian recognition of Israel as the nation state of the Jewish people," argued Mr. Netanyahu, who said the issue lies at the core of the Arab-Israeli conflict.Under pressure from the Obama administration to move forward with a two-state solution, the prime minister has complied. But in the process, say Palestinian and Israeli critics, the prime minister has created a new roadblock to Palestinian statehood.

"I think [Netanyahu] is just trying to create an obstacle. This is a new issue that was never on the table, and now he is raising it," says Mohammed Dejani, a political science professor at Al Quds University in Jerusalem. The demand reflects Israeli insecurity about Arab acceptance of their claims to Jewish sovereignty in the land of the Bible. It also suggests that the mutual recognition between Palestinians and Israelis established by the 1993 Oslo Accords is insufficient for the Israeli right, Netanyahu's core constituency. But some say it's a legitimate quid pro quo.

"For Netanyahu it was difficult to say that a Palestinian state will be the final result of the peace process. Why is it so difficult for Arabs to say that a Jewish state will be the result?" asks Shmuel Rosner, a columnist for the Jerusalem Post. [Editor's note: The original version did not identify Mr. Rosner's currenttitle.]

Mr. Rosner says that the symbolism behind such a question is just as important as issues of land, security, and water.

"Symbolism plays a very important role in the Israeli-Palestinian conflict, and all those who were convinced that the conflict could be solved by just drawing a line were mistaken. It's more complicated than this."

Palestinians: nature of Israel a domestic issue

In part of his speech, Netanyahu summed up thousands of years of Jewish history in the Holy Land, challenging Palestinian moderates to recognize the justice of the claims of Jewish nationalists to a parcel of land that Arabs consider to be their own.

Netanyahu said that as a corollary to recognizing Israel's Jewishness, Palestinian refugees can't be allowed to be repatriated inside Israel – another highly sensitive issue at the core of the conflict. Palestinians demand the right to return to Israel, from which many fled or were forced to leave during the 1948-49 war after Israel declared independence.

Likewise, the expansion of Jewish settlements in the West Bank and East Jerusalem – areas Palestinians claim for a future state and capital – is contentious. In his speech, Netanyahu said settlements must be allowed to grow to accommodate growing families, and insisted Jerusalem remain the undivided capital of Israel.

Palestinians argue that the demand to recognize Israel's Jewish character has nothing to do with peace talks, but is more about an Israeli domestic debate over the character of the state and the Arab minority – a question that they claim is best left to Arabs and Jews inside Israel.

"This is a domestic issue that is not dependent on the Palestinians," says A.B. Yehoshua, a left-wing Israeli novelist. "Israel's borders are clear. It stands firmly ... 170 countries recognize us. Why exactly do the [Palestinians] need to recognize [Israel]? Why are they getting into this problem?"

Professor Dejani agrees. "It is up to the state to decide what type of government it wants," he says.

"The proposal to recognize Israel as a Jewish state complicates the situation further," the official Nile TV network quoted Mr. Mubarak as saying.

Former President Jimmy Carter, in Jerusalem as part of a Middle East tour, echoed those sentiments. He told reporters in Jerusalem on Monday that Netanyahu had "raised many new obstacles to peace that had not existed with previous prime ministers." But he said he remained optimistic, noting that during his presidency there had initially been "even greater differences" with his Israeli counterpart Menachem Begin before he was able to broker the historic 1979 Camp David accords between Israel and Egypt.

"It was confusing, and I would assume deliberately so," he says. "This is an issue that he can talk about, knowing he has backing of the US," he adds. "Obama and Mitchell have said something similar, but it could very well prevent Palestinians from speaking to him."